What Financial Mis-Selling Means
Financial mis-selling typically refers to situations where a financial product or service was sold in a way that was misleading, unsuitable or where important information was not properly disclosed.
This is different from a product simply not working out as hoped. For a complaint about mis-selling to be considered, there generally needs to be something wrong with the way the product was sold — not just the outcome.
Common grounds for mis-selling complaints include: the product was unsuitable for the customer's needs; risks were not explained clearly; fees or costs were not disclosed; the customer was given misleading information; or the customer was not asked appropriate questions to establish suitability.
The FCA sets out rules on how financial products must be sold and what information must be provided. When firms fall short of these standards, customers may have grounds for a complaint.
Common Examples of Financial Mis-Selling
Mis-selling complaints have arisen across many types of financial product over the years.
Car finance: Concerns about discretionary commission arrangements where dealers could set interest rates in ways that were not disclosed to customers. The FCA is actively reviewing this area.
Loans and credit: Concerns about payment protection insurance (PPI) were the subject of a major remediation programme, now concluded. Other loan-related concerns can include undisclosed fees or unsuitable products.
Credit cards: Complaints can relate to how credit limits were managed, how interest was explained, or how credit was offered to customers who may have been in financial difficulty.
Insurance products: Products sold as add-ons to other purchases, or where the terms, exclusions or costs were not made clear.
Investment products: Products sold without proper assessment of a customer's risk appetite, or where the nature and risks of investments were not explained clearly.
Each category has its own regulatory framework. The FCA and Financial Ombudsman Service publish specific guidance for different product types.
How Complaints About Mis-Selling Are Assessed
When you make a complaint about mis-selling, the firm is expected to investigate it and respond within eight weeks.
The Financial Ombudsman Service (FOS) assesses complaints independently. It looks at what happened, what the relevant rules were at the time, and whether the firm's actions were fair and reasonable.
The FOS does not automatically uphold all complaints. It assesses the facts of each case. Its decisions are based on evidence.
You do not need to use a claims management company to make a mis-selling complaint. The FOS process is designed to be accessible to consumers directly.
FCA Guidance on Mis-Selling
The FCA publishes guidance on what constitutes fair treatment of customers and what firms are required to do when selling financial products.
The FCA's Consumer Duty, introduced in 2023, sets higher standards for how firms must act in the interests of customers.
The FCA also publishes thematic reviews and enforcement actions where firms have fallen short of required standards. These are publicly available on the FCA website at fca.org.uk.
Reading FCA guidance directly helps you understand the standards that applied to your product and when.
The Financial Ombudsman Process
The Financial Ombudsman Service (FOS) is a free, independent service for resolving disputes between consumers and financial businesses.
Before referring a complaint to the FOS, you must first complain to the firm and give them an opportunity to respond. If they reject your complaint or do not respond within eight weeks, you can then refer to the FOS.
The FOS will ask for information from both sides and make a decision. If it upholds a complaint, it can direct the firm to take action including paying redress. The FOS decision is binding on the firm if you accept it.
There is no charge to use the Financial Ombudsman Service. You can find out more at financial-ombudsman.org.uk.
Making Financial Complaints Yourself
Many people successfully make financial complaints themselves without using a claims management company or solicitor.
The process involves: identifying the complaint clearly, writing to the firm explaining your concern and what you would like them to do, keeping records of all correspondence, and escalating to the FOS if the firm's response is unsatisfactory.
The FCA and FOS both publish template letters and step-by-step guidance on their websites. Citizens Advice can also provide free help.
If you do use a claims management company, check they are FCA-authorised, understand the fees before you sign anything, and be aware that by law they must tell you that you can complain for free.